Quarter after quarter, why does Del Monte Foods Company (NYSE: DLM) continue to blame its woes on Charlie Tuna? If there is a brand that is a drag on earnings, reinvigorate the brand, sell the brand or terminate the brand. Del Monte needs to do one of the three with its Starkist Tuna. Right now, Del Monte's bottom line is being carried by non-human foods, specifically Meow-Mix and Milk Bone. Net sales for pet products increased 22% to just about $309 million in 1Q 2008, out of a total of $754.5 million in net sales. This represents net sales growth of 12%, none of which is reflected in increased earnings. Diluted EPS were $0.18 in 4Q 2007 but only $0.02 in 1Q 2008 despite the fact that the previous quarter had higher restructuring costs than did 1Q 2008. Administrative expenses continue to increase, as does interest expense. A significant portion of the pet food acquisitions was financed by incurring more debt. FY2008 interest expense will be in the $150-$160 million range (although management predicts lower interest rates based on less than no evidence) and capital expenditures will run between $100 million and $110 million. Operating income in the consumer products division declined by 46% to just under $14 million.

Do not look for improved earnings in 2Q 2008.The company has already stated FY 2008 earnings will be at the low end of guidance, $0.70. Del Monte will continue to face rising costs for raw materials. Management has not indicated any cost-cutting strategies, preferring to continue to pass along increased costs to consumers. But branded products are already losing market share to generic brands. Wal-Mart (NYSE: WMT) currently accounts for 30% of Del Monte sales. Wal-Mart is focusing more on its own Great Value brand, leaving Del Monte with the problem of how to replace lost shelf space and hence lost sales. The stock has done nothing since opening the year trading at $11.06. It currently trades at $10.60.